Best Tax Practices For Small Businesses

BY VLAD

Let's face it, running a business is hard enough without adding the complexity of doing your taxes each year. The key is to work with your accountant throughout the year and not just when it's time to prepare and file your tax return. This can save you a lot of time and effort as your business gets ready for the next financial year.

The importance of accountancy

Hiring the right accountant is key. Without the right one, your business could get itself into a lot of trouble. Your accountant should offer to do more than just prepare your financial statements and do your taxes. They should work with you throughout the year to track your income and spending, to make sure you don't ever have a cash flow problem, and to monitor your gross and net profits. If they don't offer all of this, they're probably not the right accountant for your small business!

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If you work with them through the whole year, and not just in March and April for tax season, your business is more likely to survive and thrive.

Keeping records

Recording everything is another of our top tips. Keeping thorough and accurate records throughout the year will ensure your tax return is correct. Without adequate record keeping, you could be left with deductions or even put yourself at risk of an audit or investigation. No one wants to have to bring in experts like Withers to help get your business out of trouble!

Why not take a look at some of the accounting software on offer. There's a number available both on and offline, and many are user friendly and inexpensive. They're a worthwhile investment that will help you in the long run.

Income

Any money coming into your business needs recording. Whether that's card payments or bank transfers, everything needs documenting and reporting. You'll also need to separate your personal and business expenses, and not doing so could land your business in hot water.

Another top tip for getting your taxes right is understanding the difference between net and gross income. If your product or service costs more money to make or provide than you charge for it, you'll lose money regardless of how much you sell. As a small business owner, it's wise to get yourself clued up on the difference between your net and gross income.

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Payroll management

Often something overlooked by many small businesses, but hiring a company or person to assist with payroll can be crucial. Whatever you do, don't try to save money by hiring someone who is less experienced. Your payroll management must be both on time and reporting correctly to ensure your taxes are correct.

It may seem as though there's a lot to think about when it comes to your small business and taxes, but by following these tips, you'll be reporting and managing your finances like an expert in no time.